S&P 500 Recovers to Show Signs of Life Again

The S&P 500 initially declined during the week but found sufficient support close to the 3750 level to rebound once again, exactly as it did the week before.

Weekly Technical Analysis for the S&P 500

The S&P 500 has seen another tumultuous week, but after initially falling, it is likely to finish up looking pretty favorable. This is a clear reference to what we had seen the week before, indicating that, if we can generate some kind of momentum, we still have a long way to go. That just indicates that we are overdue for a rebound; it doesn't imply that the trend has altered. At this point, I believe that the market may very likely attempt to test the 4000 level before turning aggressively for the 4200 level.

Having said that, a market break over the 4200 level would be a significant development, demonstrating tremendous momentum and maybe indicating that the market was prepared to alter the general direction. On the other side, if we were to reverse course and break below the 3650 level, it's probable that the market might crash. There are many inflationary worries out there, and profit projections are also expected to be revised downward, so I believe there is still a lot of noise above that might be problematic.

You can see from this chart that there has been a substantial retreat over the last several months, but it seems that we are attempting to take a small position in this space. There are many uncertainties on whether or not the Federal Reserve would tighten monetary policy as forcefully as previously believed, which naturally leads to many uncertainties.